SCCA’s 2018 consolidated financial report has been
finalized, but this year the SCCA
Board of Directors recognizes that
times and circumstances have
been unusual enough that some
additional discussion on the topic
is warranted. It’s also notable that
extremely positive items are hiding
within the consolidated figures
that need to be spotlighted.

To that end, let’s dive in.

First off, there was some
deferred maintenance that
needed to be addressed within the
Club, and for that, SCCA President
and CEO Mike Cobb presented
a 2018 budget with a planned
loss due to investments in Region
Development and Information
Technology. But even with a
planned loss, management was
able to meet all improvement
targets and manage a positive
operating income. Unfortunately,
financial markets chose December

2018 to stage a fairly significant
correction that resulted in
unrealized losses on the Club’s
investments that resulted in SCCA
Inc.’s bottom line as a loss. In
addition, SCCA Ventures recorded
a significant loss, primarily related
to the SCCA Pro Racing division.

SCCA PRO RACING

By 2015, SCCA Pro Racing had
been operating on a fee-for-service basis for some time,
making it profitable for nearly

10 years. When the SCCA Pro
Racing F4 U.S. Championship was
announced to begin in 2016, it
was expected that this would be
another fee-for-service series.

However, that business modeldid not apply to this particularseries, and SCCA Pro Racingfound itself in the role of racepromoter. By the end of 2016,SCCA Pro Racing had racked upsignificant losses, largely dueto startup costs and delayeddelivery of F4 cars. Further, SCCAPro’s fee-for-service businesstook a hit when three series leftfor other sanctioning bodies.

During 2016, it became clear
that the level of communication
and oversight provided to SCCA
Inc. by the independent SCCA
Enterprises and SCCA Pro Racing
Boards wasn’t adequate. As a
result, SCCA Ventures was formed
to improve oversight of the Club’s
two for-profit subsidiaries, with a
single combined oversight path
to the SCCA Board of Directors.

By mid-2017, SCCA Venturesfound that the agreements in placewith certain SCCA Pro Racingpartners and vendors were poorlystructured and either cost toomuch or paid too little to properlysupport the F4 series. On top ofthat, these contracts extendedreflected in SCCA Inc.’s futurefinancial reports. First, keySCCA Pro Racing partners havestepped forward; Hankook, HondaPerformance Development, andLigier have all shown increasedcommitments to the success of F3and F4. Second, SCCA Ventureswill continue to offer oversightinto contract negotiations forits entities. Third, the SCCA ProRacing staff, including ScottGoodyear and Sydney Davis Yagel,are extremely innovative andcapable. And, finally, F4 and F3are now structured to succeed,plus several fee-for-serviceracing series have signed on forSCCA Pro Racing sanctioning.

Indeed, the pieces are in
place for SCCA Pro Racing to
turn the corner in 2019, for
SCCA Enterprises to continue
as a profitable operation, and
for SCCA Inc. to continue its
solid financial performance.

through the 2018 season, so
canceling the series would have
resulted in significant losses.

Through minimizing potential
losses, improving personnel
management, and professional
training, 2017 saw significant
improvements for SCCA Pro
Racing and it also became clear
that the F4 U.S. series could
become profitable in 2019. And,
it was in this context, plus the
potential for increased revenue
generation via combined race
weekends, that the decision was
made to add the F3 Americas
series to SCCA Pro Racing’s
portfolio beginning with the 2018
season. Although the strategy
was sound, the unexpected loss
of a key sponsor resulted in a
substantial revenue shortfall.

LOOKING AHEAD

There have been a number of
significant changes that will be

FROM THE BOARD OF DIRECTORS:

SCCA’S FINANCIAL REPORT

SCCA and its subsidiary (SCCA Ventures) undergo a financial statement audit on an annual basis. The condensed
consolidated statements of financial position as of Dec. 31, 2018, and 2017, and the related condensed consolidated
statements of activities for the years then ended, are presented as a summary and therefore do not include all
the disclosures required by accounting principles generally accepted in the United States of America. To review
a copy of the complete audit report, please visit scca.com and access the File Cabinet via your member log-in.